Bakkavor factory workers hold tray of bread rolls  2100x1400

Source: Bakkavor

Food-to-go giant Bakkavor announced an encouraging outlook for 2024, after continuing to win market share in the UK over the past year.

In its trading update for the 52 weeks to 30 December 2023, the manufacturer reported its UK sales had risen to £1.82bn, a 3.9% increase compared to the previous financial period.

This represents a growth of 5.7% when looking at like-for-like revenue, which is adjusted to exclude the additional 53rd trading week in FY22.

Bakkavor said its improved figures in the UK had been driven by strong service, targeted innovation and net business gains. It also reported like-for-like revenue growth of 5.3% across its group, reaching a total of £2.2bn in 2023, with a 32% leap in China making up for an 8.4% drop in the US.

Bakkavor had previously announced a 7.6% rise in UK revenue in its first-half results to 1 July 2023, driven by price increases – its bread and pizza volumes had bucked a downwards trend in food sales relating to the cost-of-living crisis. A pay dispute among workers at its pizza factory in Harrow escalated to the point of GMB union members voting to take strike action last September.

“2023 required us to develop a decisive and dynamic plan to successfully manage another year of external challenges,” said Bakkavor CEO Mike Edwards. “We executed this plan at pace and as a result we expect to deliver improved profitability and reduced leverage for the full year.”

The company said it was anticipating FY2023 adjusted operating profit to be at least in line with the upper end of the range of market expectations. It revealed its focus on working capital improvement, combined with a targeted approach to capital expenditure, had resulted in a further reduction in operational net debt in the second half of last year.

Earlier this week, Bakkavor announced a significant shareholding of 20.1% in the group, held by US-based hedge fund Baupost, had been sold in its entirety to American private equity firm LongRange Capital. The transaction also saw LongRange founder and MD Bob Berlin making a return to the Bakkavor board, replacing Baupost representative Patrick Cook. Berlin previously held a board position from 2016 to 2018, and is said to have a deep understanding of the business as well as bringing a wide range of experience from strategic roles in the consumer goods, food, technology, and financial sectors.

Looking forward, Edwards revealed that “momentum was building in all three regions” of Bakkavor’s operations as it entered 2024, which he noted gives it confidence to deliver further financial improvements in the year ahead. “This is clearly important as unprecedented levels of inflation have impacted profit margins over the last two years,” he added.

The company stated expectations of 2024 revenue to be slightly ahead of that from 2023, with volumes to remain subdued given the continued challenging consumer environment in the UK and the reshaping of its US business. However, it said its continued effective mitigation of inflation and internal improvements would lead it to ‘another year of increased profitability’.

Bakkavor is set to publish its full year results on 5 March.